Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Copyright (c) 2006 Standard & Poor’s, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. September 25, 2006 Please see required disclosures on pages The Economic Outlook: An Inflection Point? David Wyss Chief Economist Standard & Poor’s

2. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. An Inflection Point? The Recovery Is Slowing after a strong 2004 and 2005 –Reverting to historical trend –GDP growth estimates: 3.5% in 2006 vs. 2.1% in 2007 The economy is rotating from consumer- and housing-led growth to investment-led growth –High energy prices are spurring investment –Rebuilding after Katrina creates jobs, but… –Record oil prices could stall the expansion –The housing market appears to have peaked last summer, but is stalling more than plunging The Fed is continuing to hike interest rates, but will probably have to reverse next year –Stronger European growth and a weaker dollar should mean less drag from the trade deficit

3. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Economic Indicator e2007e Real GDP Consumer Spending Equipment Investment Nonresidential Construction Inflation (Core CPI) Yield on 10-Year Note U.S. Dollar U.S. Economic Growth Expectations Estimated Annual Changes (%) Source: Standard & Poor’s and Global Insight, Inc.

4. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Home Prices Are High Relative To Household Income Ratio of Average Home Price to Average Household Disposable Income Source: BEA

5. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. The Fed Is Moving Toward Neutral Source: Federal Reserve

6. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. So, are we at an inflection point? –Probably yes Given slowing GDP growth and the interest rate environment, we think investors should benefit from a high quality bias An Inflection Point?

Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Copyright (c) 2006 Standard & Poor’s, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. Investing in a Slowing Economy Sam Stovall Chief Investment Strategist

8. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Glossary What do we mean by “high quality” –S&P Quality Rankings track the relative record of a company's growth and consistency in earnings and dividends over a trailing 10-year period –The range is from A+ (highest) to D (liquidation) STARS (STock Appreciation Ranking System) –S&P equity analysts rank stocks according to their individual forecast of a stock’s future total appreciation potential versus the expected performance of the S&P 500 index, based on a 12-month time horizon  1 STAR = Strong Sell  5 STAR = Strong Buy

9. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. EPS Growth Projections [------Estimated------] Source: Standard & Poor’s Past Performance is No Guarantee of Future Results.

10. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Yields and Quality Source: Standard & Poor’s Past Performance is No Guarantee of Future Results.

11. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Outlook Summary Single-Digit Bull –S&P 500 Target for 2006: 1315 Sector Recommendations –Pos: Cons. Staples, Financials, & Telecom –Neg: Consumer Discretionary, Technology Focus on Larger Cap, Higher Quality –S&P Quality Rankings of A- or Higher

Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Copyright (c) 2006 Standard & Poor’s, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. Looking For Safe Havens Stephen Biggar Director, U.S. Equity Research

13. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Looking For Safe Havens Environment of decelerating corporate earnings growth caused by: –Cautious consumer  Moderately higher interest rates  Weakening housing market  Elevated oil prices –Hesitant capital spending Given our forecast of a more than 100 basis point decline in the rate of GDP growth, double digit earnings growth will be more difficult to achieve

14. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Favored Sub-industries Consumer Staples –Hypermarkets & Super Centers –Drug Retailers –Soft Drinks Pharmaceuticals Financials –Banks & Diversified Financials –I-Banks and Brokers

15. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Looking For Safe Havens At this point in the cycle, we think the market will place a premium on companies with above average, and consistent, earnings growth Thus, we favor: – High S&P Quality Ranks (A- or higher) – Dividend payouts of 20% or less – S&P 5 STARS

16. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Companies Expected to be Able to Weather a Storm Price (as of Company NameTickerS&P Quality RankMarketCapPayout RatioSTARS9/20/06) EXXON MOBIL CORPXOMAbove Average (A-)409, %5$65.50 HOME DEPOT INCHDHighest (A+)71, %5$36.28 INGERSOLL-RAND CO LTDIRHigh (A)11, %5$38.76 LEHMAN BROTHERS HOLDINGS INCLEHHigh (A)34, %5$70.68 MERRILL LYNCH & CO INCMERAbove Average (A-)67, %5$77.09

Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Copyright (c) 2006 Standard & Poor’s, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. Maintaining a Healthy International Equity Allocation Alec Young Equity Market Strategist

18. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Why Quality Matters Overseas, Too Global economy is slowing Global Central Banks tightening in Europe, Japan, China, India, South Korea, Australia & U.K. Global risk aversion rising International Flight to Quality Emerging

19. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Europe & UK U.S. Dollar weakness vs. Euro enhances European equity returns for U.S. investors High dividends - S&P EURO 350 yields 3.2% Low valuations by historical standards Benefit from Quality Rotation

20. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. The Rest of the World Neutral on Japan Cyclical Headwinds for Emerging Markets

21. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Cyclical Headwinds for Emerging Markets Emerging Markets are export driven economies due to relatively low domestic per capita incomes Highly leveraged to growth in developed world which is slowing Global liquidity receding Commodities range bound Risk aversion rising

22. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Maintain a Healthy International Equity Allocation Source: Standard & Poor’s

23. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Required Disclosures S&P Global STARS Distribution -- In the U.S.: As of June 30, 2006, research analysts at Standard & Poor’s Equity Research Services U.S. have recommended 34.7% of issuers with buy recommendations, 54.5% with hold recommendations and 10.8% with sell recommendations. In Europe: As of June 30, 2006, research analysts at Standard & Poor’s Equity Research Services Europe have recommended 45.3% of issuers with buy recommendations, 43.1% with hold recommendations and 11.6% with sell recommendations. In Asia: As of June 30, 2006, research analysts at Standard & Poor’s Equity Research Services Asia have recommended 32.5% of issuers with buy recommendations, 50.9% with hold recommendations and 16.6% with sell recommendations. Globally: As of June 30, 2006, research analysts at Standard & Poor’s Equity Research Services globally have recommended 35.7% of issuers with buy recommendations, 53.1% with hold recommendations and 11.2% with sell recommendations. 5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis. 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis. 3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis. 2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price is not anticipated to show a gain. 1-STARS (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis. Relevant benchmarks: In the U.S. the relevant benchmark is the S&P 500 Index, in Europe and in Asia, the relevant benchmarks are generally the S&P Europe 350 Index and the S&P Asia 50 Index. For All Regions: All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. Additional information is available upon request.

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